Supreme Court ruling leaves Samsung unable to force customers into arbitration to settle disputes

The U.S. Supreme Court has ruled against Samsung by letting a lower court ruling stand. The ruling prevents Samsung from using the warranty that it included inside the boxes containing Samsung Galaxy S handsets, to force its customers into arbitration to settle any disputes. Companies favor forced arbitration because it allows them to set up the rules including how the arbitrator is selected. In addition, most arbitration agreements prevent the customer from starting a class action suit. Most arbitration clauses are written to limit the number of options an angry customer has against a company.

In this specific case, two smartphone buyers living in California each filed class action suits against Samsung over the performance and resale value of their Samsung Galaxy S handset. Daniel Norcia (who purchased the Samsung Galaxy S4) and Hoai Dang (who owned the Samsung Galaxy S III) both claimed that they never saw the arbitration clause written into the warranty before purchasing their respective handset model. That was because the arbitration clause was hidden inside the box along with the warranty, and was not listed on the outside of the box. As a result, both consumers had to purchase the Galaxy S phone they were considering before having access to the warranty, and thus the arbitration clause.

Back in January, a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled unanimously in favor of the plaintiffs. The court found that Samsung did not give them proper notice about the forced arbitration. In addition, neither customer had agreed to be bound by the arbitration clause. Samsung appealed to the Supreme Court, pointing out that the 9th Circuit ruling had said that the warranty was valid, just not the arbitration clause. Samsung said that this would violate the Federal Arbitration Act. The latter holds that arbitration clauses are to be treated the same as other contracts. Ergo, if the warranty is valid, the arbitration clause should be as well according to Sammy's legal team. The Supreme Court disagreed, and now Samsung must prepare for a pair of class action suits.

source: SupremeCourt via Reuters

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16 Comments

1. trojan_horse

Posts: 5868; Member since: May 06, 2016

"Most arbitration clauses are written to limit the number of options an angry customer has against a company." Screw these lousy company tactics. Power to the consumers!

6. piyath

Posts: 2445; Member since: Mar 23, 2012

Samsung is the most selfish, greedy and fraudulent company ever!!! They copy everyone, sell over priced products and still try to steal from the little man by force. US shouldn't allow these virus companies even do business in the country.

7. maherk

Posts: 6876; Member since: Feb 10, 2012

Awww you poor baby

8. razmahtaz001

Posts: 501; Member since: May 11, 2013

sounds like ur describing Apple LOL btw, the US consumers would not be able to enjoy their toys/gadgets without the many asian countries LOL

17. xfire99

Posts: 1205; Member since: Mar 14, 2012

Hes describing Apple!

10. iushnt

Posts: 3103; Member since: Feb 06, 2013

I know it hurts!! May god bless you!!

14. sissy246

Posts: 7111; Member since: Mar 04, 2015

WOW, you also just described another company we know.

18. uncle_gadget

Posts: 1050; Member since: Sep 20, 2017

Apple - Designed a phone with a defective antenna system. Apple knew it was an issue and has a bumper made which they tried to sell as an accessory. Apple makes a big phone, but didn't design it to be strong and it bent in peoples pockets. Apple refused to replace many units. Same phone later has display issues, which Apple refused to fix under warranty. Apple made Macs with no heatsinks and when they burned up, Apple said it was the consumers fault. In fact in every case where Apple was actually at fault they blame consumers.

2. RevolutionA

Posts: 397; Member since: Sep 30, 2017

This is where apple flies high

3. razmahtaz001

Posts: 501; Member since: May 11, 2013

my bad LOL

4. omnitech

Posts: 1131; Member since: Sep 28, 2016

You can sue over resale value? I better start suing every non Rolex mid tier watch I ever purchase. I would make a fortune! What a ridiculous notion though since a company has no control over resale value. It's a social construct. Don't you think every manufacturer would make their resale value as high as possible if they could? Lol

5. tedkord

Posts: 17356; Member since: Jun 17, 2009

Good. These arbitration clauses are unfair. This ruling leaves a lot of companies holding the bag.

16. sissy246

Posts: 7111; Member since: Mar 04, 2015

I do agree I also agree it's up to the buyer to read and find this out. It is not hidden they are just to lazy to read.

12. descoot3

Posts: 2; Member since: Oct 04, 2017

oh yeah, you're definantly right. Samsung is so selfish, that's why they gave every previous note7 owner the phone for less than they sell it to retail store for. or had the longest running BOGO for the galaxy s8 and note8 in industry history. that also why they literally give rewards to all their customers just for using the features of the phones like Bixby and Samsung pay. yep you're right, Samsung is selfish. they never do anything for their customers. why don't you get your iphone loving idiocracy off the page and go somewhere else

13. descoot3

Posts: 2; Member since: Oct 04, 2017

and just so you know. Samsung is the industry leader in innovation. Face ID? Samsung had it first. Fingerprint? Samsung had it first. mobile payment options? Samsung had it first. I think the company you're referring to when it comes to copying is apple. You know, that company that releases the same innovations as Samsung 2-3 years later, and then labels them as new and never done before. just because they know that iphone users are naïve and will believe whatever they are told about the iphone

19. uncle_gadget

Posts: 1050; Member since: Sep 20, 2017

According to the present facts, Samsung is legally right. When you purchase, you agree to the terms of the purchase. Everything can't fit on the outside of the box. Most people don't read it even if it was there. The lawyers trying to argue in favor of the consumer are full of BS. At some point, courts need to stop siding with consumers when they are wrong. The consumer isn't always right and in this case they aren't.

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